Overview and impact on COSIS servicing arrangements
As I’m sure you are aware we are currently in the midst of a challenge from COVID 19 that is unprecedented in living memory. Whilst the insurance industry, like many others, had detailed business continuity plans no one imagined a shutdown on this scale with the need to move much of the industry to remote working at short notice. To add to the insurance industry’s difficulties it finds itself protecting a vast range of property no longer occupied or used as described when Insurers accepted the risk and calculated a premium. This will be an important consideration when trying to understand and interpret insurer's communications during this crises.
Insurers have had to consider how they might reasonably deal with the changes forced upon their clients by the governments response to COVID 19 but prior to the announcement of the “lockdown” the pace of change had been such that advice written one day had become obsolete by the next. Hopefully however we will now have a short window of stability that will allow this advice to remain valid over the next few weeks.
This web-page is primarily intended to provide guidance on managing and protecting church property from an insurance stand point. The Church of Scotland has however issued general advice regarding COVID 19 which can be found at the link below.
Managing the change in your Property Risk
The most common question COSIS staff are being asked is what the requirements are for managing church property closed directly following recent government advice to avoid public gatherings and subsequent lockdown. Aviva have now agreed to extend the period before an active church, closed following the lockdown, is deemed unoccupied from 45 to 90 days. This is very helpful as, for a significant period, it avoids additional premiums relating to unoccupancy and the associated formal requirement for inspection. It is important to note however that congregations still have a Duty of Care under their insurance policy to
- maintain their Buildings, Contents and Equipment in a satisfactory state of repair
- take all reasonable steps to prevent damage to the Property Insured
- take all reasonable steps to prevent accident or injury to any person
- comply with all legal requirements and safety regulations and conduct their business in a lawful manner.
It is impossible to be prescriptive about what must be done to meet this duty of care as each church has its own individual circumstances. Aviva have suggested that congregations should carryout risk assessments to consider the changing risk/lack of supervision. As a minimum however inspection both internally and extenally on a regular basis and both before and after an increased risk, such as extreme weather, would seem like an appropriate base level.
An Important Notice regarding your policy can be viewed here that summarises the areas that Aviva think you should be considering for action.
Property where there are existing Inspection or Management requirements
Please note that the text above only applies only to property which has closed as a direct response to the Government’s request to avoid public gatherings. Where a property was already subject to an agreed inspection or other risk management requirement this will remain in place without specific referral and agreement to the contrary. In general the requirement that these properties are inspected both externally and internally is unlikely to be waived.
Loss of Income from Letting Churches and Halls
In addition to concern over risk to the building many congregations will be wondering about the position regarding loss of earnings from letting their hall. Unfortunately there is no cover under our church policy or the vast majority of commercial insurance policies. The only cover for loss of revenue due to disease relates to named diseases specified in the policy wording where the risk can, to a degree be statistically quantified, and an appropriate premium charged.
Aviva’s statement on this issue is shown below
Does Aviva's Business Interruption cover COVID-19?
The Government announcement on Tuesday evening (17 March) concerning both ours and other insurers' position with regards to Business Interruption has caused some confusion and as a result, we've received a number of queries from both you and your clients.
To clarify, COVID-19 is not covered under our standard Business Interruption policies and, as the chancellor said, you cannot retrospectively change insurance contracts at this time without threatening the future of the insurance industry.
Our Business Interruption cover is based on a specified list of diseases and has been since the SARS outbreak in 2003. These policies exclude Business Interruption due to new and emerging diseases, like COVID-19.
Our policy wording clearly identifies the diseases we offer cover for and, in addition, highlights that new and emerging diseases like COVID-19 are not covered.
For information both you and your clients may find useful, please see details of the additional support the Government is provided on